Use our free Roth IRA calculator to estimate your maximum yearly contribution, determine how much your contributions might be valued at retirement, and determine the amount of taxes you could potentially avoid. See our comprehensive Roth IRA guide to find out more about Roth IRAs and determine if they’re a good fit for you. Increasing your retirement savings only requires a few simple actions. Establish a NerdWallet account to lower your expenses, pay off debt, and increase your finances.
How to use this free Roth IRA calculator
The Roth IRA calculator will automatically determine how much you’re entitled to contribute to a Roth IRA this year based on your current age, modified adjusted gross income, and tax-filing status. If you want to give less, you can reduce that contribution amount. (The IRS has established income restrictions for Roth IRA eligibility; at particular income levels, your maximum yearly contribution starts to taper off and eventually disappears entirely. More about this is provided below.)
Your total intended yearly contribution, your present age, your retirement age, and the rate of return are the variables you enter into the calculator to determine your Roth IRA amount at retirement. The Roth IRA calculation uses an annual income growth assumption of 2%. There is no presumption of inflation.
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The Roth IRA calculator will automatically determine the amount you’re entitled to contribute to a Roth IRA this year based on your current age, modified adjusted gross income, and tax-filing status. If you want to make a smaller gift, you can reduce that amount. (The IRS has established income qualifying requirements for Roth IRAs; at certain income levels, your maximum yearly contribution starts to gradually decrease and finally disappears entirely. Details about this are provided below.)
Your total yearly planned contribution, retirement age, and rate of return are the key variables that determine your Roth IRA amount when you reach retirement. A 2% yearly income growth is what the Roth IRA calculation expects. No inflationary assumption is made.
Key details about Roth IRAs
A tax-advantaged individual retirement account is a Roth IRA. Roth IRA contributions are made after taxes, and the money grows tax-free. You won’t pay income tax when you withdraw money from a Roth IRA in retirement if you adhere to the regulations. This stands in sharp contrast to how typical IRAs and 401(k)s are taxed; both of those accounts allow you to deduct contributions from your taxes, but distributions made in retirement are subject to income tax.
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A Roth IRA is an account through which you can purchase assets; it is not an investment in and of itself. You’ll have access to a wide range of investments, including individual stocks, bonds, and mutual funds, with the majority of Roth IRAs. Your choice of assets should be based on your
Roth IRA annual contribution limits
The most you may contribute to an IRA in a calendar year is the Roth IRA annual contribution limit. In 2022 and 2023, the maximum yearly contribution to a Roth IRA is $6,000 and $6,500, respectively. For those 50 years of age or older, a catch-up payment of up to $1,000 is permitted annually. Both Roth and regular IRA contribution limitations apply; if you have both, you can make a combined contribution of up to $6,000 in 2022 ($7,000 if you’re 50 or older) and $6,500 in 2023 ($7,500 if you’re 50 or older).
Roth IRA income limits 2022 and 2023
The Roth IRA income cap is the maximum yearly contribution that may be made to a Roth IRA before it starts to phase out. Certain income levels fully prohibit contributions to Roth IRAs.
Roth IRA alternatives
Many people utilise a 401(k) or other employer-sponsored retirement plan as their main retirement account. In 2023, you are permitted to make 401(k) contributions of up to $22,500 (with an extra $7,500 as a catch-up contribution for individuals who are 50 or older). Some firms even provide a Roth 401(k) with no income restrictions.
Traditional IRA: If your employer does not provide a 401(k), you might be able to contribute the maximum amount to a conventional IRA. Bear in mind that your ability to deduct contributions may be restricted if your spouse participates in a workplace retirement plan. The typical IRA deduction restrictions are described in further detail.
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401(k) or other workplace plan: A 401(k) or other employer retirement plan is frequently used as a person’s main retirement account. In 2023, your maximum 401(k) contribution is $22,500 (with an extra $7,500 for individuals age 50 or over as a catch-up contribution). Even Roth 401(k) plans without income restrictions are provided by certain businesses.
Traditional IRA: You might be able to contribute the maximum amount to a conventional IRA even if your employer does not provide a 401(k). Recall that your ability to deduct contributions may be restricted if your spouse participates in a workplace retirement plan. See more information about the conventional IRA deduction restrictions.
Age of retirement
The age you intend to retire is your retirement age. Depending on your birth year, the full retirement age is between 65 and 67.
Rate of return anticipated
The amount investments in your Roth IRA generate annually is known as the annual rate of return. The Roth IRA calculator sets the rate of return by default to 6%, which has to be changed to reflect the anticipated yearly return on your investments.
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Income from investments
Investment earnings are any profits you’ve made through Roth IRA assets. Generally, your Roth IRA must be at least five years old and you must be 59 12 years of age or older in order to withdraw investment profits. In contrast, you may always withdraw tax- and penalty-free from a Roth IRA the money you’ve contributed. Any other withdrawals of profits, with a few exceptions, may be subject to income tax and, in some circumstances, an extra 10% tax penalty. Below is a complete list of Roth IRA regulations.
